The decision to revoke the licenses of all but three money transfer companies was backed by a warning, issued on Tuesday
, that advises Nigerians at home and abroad
to "beware of the unwholesome activities of some unlicensed International Money Transfer Operators."
Citing "the greater economic good of Nigeria," the Central Bank stated that it will "not condone any attempt aimed at undermining the country's foreign exchange regime."
The sudden move has created immediate backlash because it affects a large volume of money. Remittances to Nigeria totaled about $20.8 billion in 2015
, according to data from Global Knowledge Partnership on Migration and Development.
WorldRemit is an online money transfer service that launched in Nigeria 2011 and one of the companies affected by the edict. It released a statement
calling the new rules "draconian" and noted that the new policy would leave only three companies able to function: Western Union, MoneyGram and Ria. Those companies have physical operations on the ground in Nigeria.
"This move is arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora, who rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing," said WorldRemit founder and CEO Ismail Ahmed.
Ahmed said while Western Union used to control 78% of the transfers to Nigeria, now it controls less than 20%.
Ahmed, whose company says it sends 40,000 money transfers to Nigeria each month, also laments the lack of clarity surrounding the change.
"This is the first time in my 20 years of experience that a regulator is saying if you want to send money to Nigeria, you have to physically come to Nigeria and set up a company," Ahmed said. "On Monday evening, Nigeria simply shut down transfers. The banks told us they couldn't process our transfers. The country was one of the most competitive markets until Monday."
He added, "This is extreme. It's going to be quite explosive among the Nigerian diaspora."
CNN has contacted the Central Bank but has not received a reply.